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Speaking in an interview with cnn, Gates said, "The Iranians are in a very bad spot now because of this deception, in terms of all of the great powers. And there obviously is the opportunity for severe additional sanctions."
Gates made the remarks before an international talks with Iran is due to be held in Geneva on Oct. 1. Officials from six world powers -- the United States, Britain, France, Russia, China and Germany -- will participate in the talks.
The United States and its western allies are trying to focus on Iran's nuclear issue at the upcoming talks. If Iran fails to change its nuclear policy to the satisfaction of the world's powers, the international community will "move in the direction of severe sanctions."
U.S. President Barack Obama on Saturday reiterated his call for Iran to have "a serious, meaningful dialogue" over its disputed nuclear program.
Iran informed the International Atomic Energy Agency (IAEA) of the existence of a second uranium enrichment facility on Monday, deepening concerns that it has a secret program to produce nuclear weapons.